Sundaram Finance Share price and Fundamental Analysis

Company History

Sundaram Finance (SFL) was promoted by Madras Motor Insurance Company, a part of the reputed TVS Group. The Company was incorporated in 1954. It became a public limited company in 1961 and went public in 1972. The main business of the company includes hire purchase and lease financing of commercial vehicles, cars and machinery. It also undertakes short-term activities such as bill discounting and commercial mortgage lending.

SFL achieved its leadership position by a unique combination of traditional conservatism and judicious dynamism. Faith, Depositor Confidence, Institutional Trust, Investor Steadfastness & Employee loyalty are the five pillars to support the strong edifice of the company. It set industry standards by computerizing and networking all its offices through a variety of communication media including VSAT installations. These ensure efficient and smooth functioning of all its systems and procedures resulting in better customer service. The company allotted bonus shares in the ratio of 1:1 in Nov. 1995.

The subsidiaries of the company are Sundaram Home Finance Ltd, Sundaram Asset Management Company Ltd, Royal Sundaram Alliance Insurance Company Ltd, Sundaram Finance Distribution Ltd, LGF Services Pvt Ltd and Sundaram Finance Trustee Company Ltd.

As part of diversification and to provide more financial service to the customers, the company entered in to various collaboration and joint ventures. It formed an asset management company called Sundaram Newton Asset Management Company Pvt. Ltd. in collaboration with Newton Management, UK. In housing loan sector it promoted Sundaram Home Finance Limited with equity participation from International Finance Corporation (IFC), Washington, and FMO (Netherlands Development Finance Company).

During 1999-2000, India Equipment Leasing (IEL), Aparajita Finance Company (APC), Balika Finance Company (BFC) & Paramjyothi Finance Company (PFC) were amalgamated with the company. The company paid a total consideration of Rs 20.10 crore for the acquisition of shares of the amalgamating companies.

During 2000-2001, Sundaram Finance Services (SFSL) was amalgamated with the company. Subsequently Sundaram Finance Securities (SFSec.) became a wholly-owned subsidiary of your company. Further during the year it promoted Fiat Sundaram Auto Finance Limited, a joint venture with Fidis S.p.A., Italy for financing Fiat cars. Also with the opening up of the insurance sector the company along with Royal & Sun Alliance Insurance plc formed a joint venture company named Royal Sundaram Alliance Insurance Company (RSAIC) for non-life insurance business. It commenced its operation in March 2001 and offers full range of insurance products including fire, motor, personal accident, home, health, travel and rural insurance.

The Company has merged Lakshmi General Finance Ltd (LGF) with itself with effect from 1st April 2004. According to the scheme of merger the company has issued 3775965 equity shares of Rs.10/- each to the shareholders of LGF in the ratio of 1:1.52. Consequent to this merger the company's paid up capital increased to Rs.27.78 crores.

During the year 2015, the Company credited an amount of Rs.256.56 crores to the Capital Reserve which pertains to the sale of 17,37,012 equity shares of the Company, held by SFL Shares Trust. The Company received the proceeds, being the sole beneficiary of the Trust. These shares accrued to the Trust on account of the merger of Lakshmi General Finance Limited with the Company, in the year 2005.

During the year 2015, Sundaram Parekh Warehousing Services Limited, a wholly owned subsidiary of Infreight Logistics Solutions Limited which is a wholly owned subsidiary of SFDL, merged with Infreight, under a Scheme of Amalgamation under Section 391 to 394 of the Companies Act, 2013, effective 1st April 2014.

During the year 2016, the Company sold its entire holdings of 49.90% in BNP Paribas Sundaram Global Securities Operations Pvt., Ltd., a joint venture company to the JV partner Paribas Securities Services, Paris, for a total consideration of Rs 44.30 crore.

During the year 2016, the Company acquired 8,19,00,000 equity shares of Royal Sundaram Alliance Insurance Company Limited (Royal Sundaram) from Royal & Sun Alliance Insurance PLC for a total consideration of Rs 450 crore, raising the Company's shareholding in Royal Sundaram from 49.90% to 75.90%. Consequently, Royal Sundaram became a subsidiary of the Company and the company's name was changed to Royal Sundaram General Insurance Co. Limited.

During the FY 2016, the company's paid-up capital was reduced from Rs 94.50 crores to Rs 24 crores in accordance with the Scheme of Capital Reduction approved by the Hon'ble High Court of Judicature at Madras.

Sundaram Infotech Solutions Limited (SISL) was amalgamated with the Company with effect from the Appointed Date', i.e., 1st April 2016, pursuant to the Order of the Hon'ble National Company Law Tribunal (NCLT), Division Bench, Chennai, dated 26th September 2017 under Sections 230 to 232 of the Companies Act, 2013.

Pursuant to the sanctioning of the Composite Scheme of Arrangement and Amalgamation (Scheme) by the Hon'ble National Company Law Tribunal (NCLT), Division Bench, Chennai, vide Order dated 12th January 2018, received by the Company on 18th January 2018, the following matters, as envisaged in the Scheme with effect from the Appointed Date', i.e., 1st April 2016, have become operative:

a. Amalgamation of Sundaram Insurance Broking Services Limited (SIBSL) and Infreight Logistics Solutions Limited, wholly owned subsidiaries, with the Company;

b. De-merger of the shared services business of Sundaram BPO India Limited (Sundaram BPO), subsidiary, into the Company; and

c. De-merger of the non-core business of the Company, viz. training services, identified shared services including shared services vested from Sundaram BPO, apart from the non-financial services investments, together with related assets, into Sundaram Finance Holdings Limited (SFHL).

As provided in the Scheme, on 12th February 2018, all the shareholders of the Company were allotted 1 equity share of Rs 5/- each credited as fully paid-up in the capital of SFHL for every 1 fully paid-up equity share of Rs 10/- held by them in the Company as on the record date, i.e., 2nd February 2018. Pursuant to the said allotment, the shareholding of the Company in SFHL got reduced from 100% to 26.47% and SFHL became an associate of the Company. The equity shares of SFHL were listed on the National Stock Exchange of India Limited with effect from 26th March 2018.